SEBI Bars IndusInd Bank Executives In Insider Trading Probe, Freezes Assets Worth Rs 19.78 Crore

As per the order, the officials’ bank accounts have been frozen to the extent of the alleged gains from insider trading. SEBI has further directed them to open fixed deposit accounts in their names

On March 11, 2025, following the bank’s public disclosure, the stock plunged 27.17 per cent, from Rs 900.60 to Rs 655.95

Source : JustDial

The Securities and Exchange Board of India (SEBI) has issued an interim order barring five current and former senior executives of IndusInd Bank from participating in the securities market, citing their alleged involvement in insider trading. The executives are accused of using unpublished price-sensitive information (UPSI) to avoid losses totaling approximately Rs 19.78 crore.

The ex-parte interim order issued by SEBI on May 28 names five senior executives of IndusInd Bank: Arun Khurana (Executive Director and Deputy CEO), Sumant Kathpalia (Managing Director & CEO), Sushant Sourav (Head of Treasury Operations), Rohan Jathanna (Head of GMG Operations), and Anil Marco Rao (Chief Administrative Officer, Consumer Banking). SEBI stated that some of the named individuals have already resigned from their positions at the bank.

As per the order, the officials’ bank accounts have been frozen to the extent of the alleged gains from insider trading. SEBI has further directed them to open fixed deposit accounts in their names for the impounded amounts, with a lien marked in SEBI’s favour, restricting any withdrawal without the regulator’s approval.

Background of the Investigation

SEBI initiated a suo motu investigation after a significant drop in IndusInd Bank’s share price on March 11, 2025, the day after the bank publicly disclosed discrepancies in its derivative portfolio accounting. The issue stemmed from changes mandated by the RBI’s Master Direction issued in September 2023.

Internal emails reviewed by SEBI revealed that figures showing growing discrepancies of Rs 1,572 crore (September 2023), Rs 1,776.49 crore (December 2023), and Rs 2,361.69 crore (March 2024) were circulated within the bank well before the public disclosure. According to the regulator, the bank’s top management was made aware of the issue by December 2023, yet the disclosure was delayed until March 2025.

Allegations of Insider Trading

During the UPSI period, identified as December 4, 2023, to March 10, 2025, the five executives allegedly sold large volumes of IndusInd Bank shares while refraining from any purchases, a pattern SEBI says indicates an intent to avoid impending losses.

On March 11, 2025, following the bank’s public disclosure, the stock plunged 27.17 per cent, from Rs 900.60 to Rs 655.95.

The order highlights key transactions involving the accused executives, including Arun Khurana, who sold 3.48 lakh shares and avoided losses of over Rs 14.39 crore, and Sumant Kathpalia, who offloaded 1.25 lakh shares to sidestep losses exceeding Rs 5.2 crore. The other three officials together evaded losses of approximately Rs 19 lakh through similar share sales

SEBI’s Directives and Next Steps

In addition to freezing their bank accounts, SEBI has barred the five individuals from buying or selling any securities until further notice and directed them to disclose all personal assets and financial holdings within 15 days. The regulator has also reserved the right to take further action, including imposing penalties, as the investigation remains ongoing. This interim order marks a significant step in SEBI’s broader crackdown on insider trading and corporate governance lapses in India’s financial markets.